Government pensions advice needed

confusednhs

Hello, can anyone help.....
I work for the local authority and am soon to be TUPE'd over to a private health care company on 1st April. I have been paying into the LGPS for 8 years and now have the option to remain in it or to switch to the NHS pension. I understand that they are both good options but I am unsure whether to switch or stay as I am.

I am under pressure to make a decision as this is a time limited offer only until the 21st March.

I have no information on whether it is possible to transfer my pot into the NHS pension if I choose to switch, and the new company is not providing any advice.

I am currently paying 5.8% LA pays 21.4%

I would pay 6.5% and NHS contribute 23.7% overall.

I am 55 and plan to work for another maybe 9years or so.

I know I would pay more if in the NHS but may receive more in return, is it worth the extra I would pay?Any advice welcome.
Thank you

Marcon

confusednhs said:

Hello, can anyone help.....
I work for the local authority and am soon to be TUPE'd over to a private health care company on 1st April. I have been paying into the LGPS for 8 years and now have the option to remain in it or to switch to the NHS pension. I understand that they are both good options but I am unsure whether to switch or stay as I am.

I am under pressure to make a decision as this is a time limited offer only until the 21st March.

I have no information on whether it is possible to transfer my pot into the NHS pension if I choose to switch, and the new company is not providing any advice.

I am currently paying 5.8% LA pays 21.4%

I would pay 6.5% and NHS contribute 23.7% overall.

I am 55 and plan to work for another maybe 9years or so.

I know I would pay more if in the NHS but may receive more in return, is it worth the extra I would pay?Any advice welcome.
Thank you

So you're expected to make a major decision in a couple of weeks, with no information to help you make that decision... Neither your current employer, nor your new employer, can give you advice, but it's disappointing they are not arranging for advice to be provided, or at the very least illustrations/projections. Try asking for some projections of how things would pan out for you depending on the scheme you are in, and if you do/don't transfer.

The LGPS and NHS are both members of something called the 'public sector transfer club' so you can transfer, and it would be on 'better' terms than someone transferring from a scheme which isn't in the 'club'. That doesn't automatically mean you should (sorry!).

Forget the employer contribution rates. They are meaningless in the context of a defined benefit pension, and are only provided to try and flag to employees what a great deal they are getting - and you are getting a fab deal, whichever of these two schemes you are in.

Given how important this is, you may need to take your own financial advice. There's a limit to what can be provided on a site like this, especially in the absence of quite a lot of personal information which probably is better not posted pubicly.

Sarahspangles

Presumably you’re in a CARE scheme in LGPS.

In the NHS pension, which is a version of CARE you get 1/54th of your annual pensionable salary added to the pension every year. This is revalued by inflation plus 1.5% every year while you’re working. The 1.5% does make a difference.

If you read the NHS scheme guidance it refers to pots (the usual graphic is a little piggy bank) and you’ll also see references to employer contributions. It can be confusing because there isn’t actually a pot of money in the way there is with Defined Contribution (DC) schemes. It’s a Defined Benefit pension. I mention this because if you use the NHSBSA terms someone will always contradict you!

If you work out what each pension buys you, don’t forget to factor in death in service and spouse/partner pension if relevant. I have both types and the NHS rules around partners seem a bit stricter to me.

hugheskevi

The most important thing to consider is likely to be the accrual rate and the in-service revaluation rate.

The NHS accrual is 1/54 and revalues in-service at CPI+1.5%

The LGPS is 1/49 and revalues at CPI

The higher in-service revaluation but lower accrual rate means the NHS is better if you stay in service for a long time, but if you leave early then the LGPS is better with a higher accrual rate but lower revaluation.

Coincidentally, a simple bit of spreadsheet comparison suggests the cross-over point is about 10 years of further work, about the same length of time you plan to work for. After that the NHS might be better. So the answer is not clear-cut.

However, in the scenario where there NHS is better, the advantage is small. You currently don't plan to work much beyond where the NHS starts to be advantageous. If your plans change and you leave employment before about 9 years the LGPS would be better. The LGPS has lower contribution rates. The LGPS offers integrated AVC you can take advantage of to be far more tax efficient.

From a cursory glance, the LGPS seems to have the advantage, but not to a huge extent.

LHW99

Also check what the NRA's are for each, and if they are the same or not.

BikingBud

Marcon said:

confusednhs said:

Hello, can anyone help.....
I work for the local authority and am soon to be TUPE'd over to a private health care company on 1st April. I have been paying into the LGPS for 8 years and now have the option to remain in it or to switch to the NHS pension. I understand that they are both good options but I am unsure whether to switch or stay as I am.

I am under pressure to make a decision as this is a time limited offer only until the 21st March.

I have no information on whether it is possible to transfer my pot into the NHS pension if I choose to switch, and the new company is not providing any advice.

I am currently paying 5.8% LA pays 21.4%

I would pay 6.5% and NHS contribute 23.7% overall.

I am 55 and plan to work for another maybe 9years or so.

I know I would pay more if in the NHS but may receive more in return, is it worth the extra I would pay?Any advice welcome.
Thank you

So you're expected to make a major decision in a couple of weeks, with no information to help you make that decision... Neither your current employer, nor your new employer, can give you advice, but it's disappointing they are not arranging for advice to be provided, or at the very least illustrations/projections. Try asking for some projections of how things would pan out for you depending on the scheme you are in, and if you do/don't transfer.

The LGPS and NHS are both members of something called the 'public sector transfer club' so you can transfer, and it would be on 'better' terms than someone transferring from a scheme which isn't in the 'club'. That doesn't automatically mean you should (sorry!).

Forget the employer contribution rates. They are meaningless in the context of a defined benefit pension, and are only provided to try and flag to employees what a great deal they are getting - and you are getting a fab deal, whichever of these two schemes you are in.

Given how important this is, you may need to take your own financial advice. There's a limit to what can be provided on a site like this, especially in the absence of quite a lot of personal information which probably is better not posted pubicly.

This.

When the "A" word is used in association with pension people immediately lock up and say cannot do that, not qualified. 

What you need is the people that are conducting the TUPE to explain how exactly your current pension position will be captured and moved across.

• What you have now and if left what it might offer, a projection. 
• How you will accrue benefits under the new scheme if/when you move across.
• How your transferred benefit will be treated if you decide to transfer those in.
• Do dates, retirement ages, or accrual rates or even inflation factors change? Full CPI to capped rates perhaps?

The first 2 should be straightforward and the last might take a little work but if they haven't done the ground work, how are they Transferring the Undertaking and Protecting your existing rights - would seem like a fundamental failure of the TUPE process.

So I would refer back to them and clarify you do not need Financial Advice but you do need a very clear explanation of how the pension system will work going forward.

Once they have explained the machinations you will need to model and see which might suit your aspirations best.

hyubh

Dare I suggest some responders, while well meaning, are overdramatising this...? We're talking about the CARE LGPS in England and Wales vs. the CARE NHS Pension Scheme, not two radically different things. Nothing is kept private, a financial advisor won't be able to give the OP anything they can't do themselves with a simple spreadsheet. NPAs are not different, they are the same, ditto pension increases (including in deferment). Overall benefits are supposed to be roughly similar, the main difference, per Sarahspangles and hugheskevi's replies, are LGPS's higher accrual rate but lower revaluation rate vs. the NHS' lower accrual rate but higher revaluation rate.

If the OP decides to switch, then assuming no specific bulk transfer arrangements, a Club transfer will be available for up to 12 months on joining the NHS scheme as normal. However given the OP only has CARE benefits in the LGPS, their prospective transfer in wouldn't acquire the higher NHS revaluation rate, it would keep the LGPS one (this would apply even if there were specific bulk transfer arrangements). Also while transferring the LGPS pension into the a new NHS one would lose the possibility of transferring out the former to a DC arrangement (given you can't do that with an NHS pension), the OP would have to have highly unusual circumstances for a DC transfer out to be worth even considering anyhow.

hyubh

BikingBud said:

Marcon said:

confusednhs said:

Hello, can anyone help.....
I work for the local authority and am soon to be TUPE'd over to a private health care company on 1st April. I have been paying into the LGPS for 8 years and now have the option to remain in it or to switch to the NHS pension. I understand that they are both good options but I am unsure whether to switch or stay as I am.

I am under pressure to make a decision as this is a time limited offer only until the 21st March.

I have no information on whether it is possible to transfer my pot into the NHS pension if I choose to switch, and the new company is not providing any advice.

I am currently paying 5.8% LA pays 21.4%

I would pay 6.5% and NHS contribute 23.7% overall.

I am 55 and plan to work for another maybe 9years or so.

I know I would pay more if in the NHS but may receive more in return, is it worth the extra I would pay?Any advice welcome.
Thank you

So you're expected to make a major decision in a couple of weeks, with no information to help you make that decision... Neither your current employer, nor your new employer, can give you advice, but it's disappointing they are not arranging for advice to be provided, or at the very least illustrations/projections. Try asking for some projections of how things would pan out for you depending on the scheme you are in, and if you do/don't transfer.

The LGPS and NHS are both members of something called the 'public sector transfer club' so you can transfer, and it would be on 'better' terms than someone transferring from a scheme which isn't in the 'club'. That doesn't automatically mean you should (sorry!).

Forget the employer contribution rates. They are meaningless in the context of a defined benefit pension, and are only provided to try and flag to employees what a great deal they are getting - and you are getting a fab deal, whichever of these two schemes you are in.

Given how important this is, you may need to take your own financial advice. There's a limit to what can be provided on a site like this, especially in the absence of quite a lot of personal information which probably is better not posted pubicly.

This.

When the "A" word is used in association with pension people immediately lock up and say cannot do that, not qualified. 

What you need is the people that are conducting the TUPE to explain how exactly your current pension position will be captured and moved across.

• What you have now and if left what it might offer, a projection. 
• How you will accrue benefits under the new scheme if/when you move across.
• How your transferred benefit will be treated if you decide to transfer those in.
• Do dates, retirement ages, or accrual rates or even inflation factors change? Full CPI to capped rates perhaps?

The first 2 should be straightforward and the last might take a little work but if they haven't done the ground work, how are they Transferring the Undertaking and Protecting your existing rights - would seem like a fundamental failure of the TUPE process.

It won't be a fundamental failure of the TUPE process for the simple reason that TUPE doesn't cover pensions. While public sector workers have special pension rights on a TUPE transfer, they have clearly been upheld here given continuing membership of the LGPS is an option. Even compulsory movement into the NHS pension scheme would be perfectly valid, if certain procedures are followed (which in this case would be as much in respect of protecting the LGPS fund as anything else, i.e. determining whether a deficit payment is due).

confusednhs

Thank you everyone who commented, you've all been so helpful. I am leaning towards staying with the LGPS due to the many points raised. Thanks again.

Marcon

hyubh said:

Dare I suggest some responders, while well meaning, are overdramatising this...? We're talking about the CARE LGPS in England and Wales vs. the CARE NHS Pension Scheme, not two radically different things. Nothing is kept private, a financial advisor won't be able to give the OP anything they can't do themselves with a simple spreadsheet. NPAs are not different, they are the same, ditto pension increases (including in deferment). Overall benefits are supposed to be roughly similar, the main difference, per Sarahspangles and hugheskevi's replies, are LGPS's higher accrual rate but lower revaluation rate vs. the NHS' lower accrual rate but higher revaluation rate.

If the OP decides to switch, then assuming no specific bulk transfer arrangements, a Club transfer will be available for up to 12 months on joining the NHS scheme as normal. However given the OP only has CARE benefits in the LGPS, their prospective transfer in wouldn't acquire the higher NHS revaluation rate, it would keep the LGPS one (this would apply even if there were specific bulk transfer arrangements). Also while transferring the LGPS pension into the a new NHS one would lose the possibility of transferring out the former to a DC arrangement (given you can't do that with an NHS pension), the OP would have to have highly unusual circumstances for a DC transfer out to be worth even considering anyhow.

If you're a pensions novice (and OP clearly is), they are starting from a position of little to no knowledge - so providing the relevant information is important. You (and others reading this thread) might know that the schemes have considerable similarities, but that won't be evident to the average individual, to whom the abbreviation CARE means precisely nothing. I doubt 'accrual rate' and 'revaluation rate' are in OP's everyday vocabulary. A blithe  reference to 'a simple spreadsheet' assumes levels of numeracy/pensions knowledge which may quite simply not be realistic.

For many, they would't know where to start - which is why they come to a site like this. Sometimes seasoned posters on this site need to remember such details. Providing some basic projections etc shouldn't be beyond the wit of the current and future employers - who would also do well to recognise that the employees being TUPEd aren't magically going to grasp the salient points without any help. Reassurance and information are surely the name of the game?

hyubh

Marcon said:

hyubh said:

Dare I suggest some responders, while well meaning, are overdramatising this...? We're talking about the CARE LGPS in England and Wales vs. the CARE NHS Pension Scheme, not two radically different things. Nothing is kept private, a financial advisor won't be able to give the OP anything they can't do themselves with a simple spreadsheet. NPAs are not different, they are the same, ditto pension increases (including in deferment). Overall benefits are supposed to be roughly similar, the main difference, per Sarahspangles and hugheskevi's replies, are LGPS's higher accrual rate but lower revaluation rate vs. the NHS' lower accrual rate but higher revaluation rate.

If the OP decides to switch, then assuming no specific bulk transfer arrangements, a Club transfer will be available for up to 12 months on joining the NHS scheme as normal. However given the OP only has CARE benefits in the LGPS, their prospective transfer in wouldn't acquire the higher NHS revaluation rate, it would keep the LGPS one (this would apply even if there were specific bulk transfer arrangements). Also while transferring the LGPS pension into the a new NHS one would lose the possibility of transferring out the former to a DC arrangement (given you can't do that with an NHS pension), the OP would have to have highly unusual circumstances for a DC transfer out to be worth even considering anyhow.

If you're a pensions novice (and OP clearly is), they are starting from a position of little to no knowledge - so providing the relevant information is important. You (and others reading this thread) might know that the schemes have considerable similarities, but that won't be evident to the average individual, to whom the abbreviation CARE means precisely nothing. I doubt 'accrual rate' and 'revaluation rate' are in OP's everyday vocabulary. A blithe  reference to 'a simple spreadsheet' assumes levels of numeracy/pensions knowledge which may quite simply not be realistic.

If the OP would like further assistance on what the terms used mean, all they have to do is ask.

To be honest, I'm confused as to whether you are actually disputing any of the factual claims I made. Are you denying that the LGPS and NHS pension scheme are, in fact, not so different in the grand scheme of things...? That when comparing, the main thing to consider is the respective accrual rate vs. revaluation rate biases...?

For many, they would't know where to start - which is why they come to a site like this.

Exactly, the OP did know where to start - they asked in this forum, and received some guidance

Reassurance and information are surely the name of the game?

And as such, scaremongering that the choice could prove extremely costly if made the wrong way is not very helpful, because it isn't true. It also isn't helpful to imply that taking paid for financial advice is required. Apart from anything else, I'd be interested to hear who exactly are these financial advisors that specialise in inter-DB matters...